The whole assumption that higher rates benefit banks is riddled with simplicity.
In general yes, higher rates do help banks. But in reality, banks just transform liquidity from the short-term towards the mid-term. They take deposits at 0.2% and issue 3-year loans at 5%.I.e. banks need a relatively steep yield curve. To that effect – see how the Banks stocks index is negatively correlated with the slope ...
The markets are mesmerized by the inflation through the spike in Crude oil
While we still believe that $200/barrel is almost inevitable, food inflation is far more important. First, food is a much bigger expense than % of direct spending. Second, the US has seen $150 nominal oil before, which adjusted for inflation since 2008, bringing us straight to $200/barrel. Third, with the planting season being off in ...
Profound rotations across Emerging Markets
Latin America stands to benefit from increased allocationsas Russia became uninvestable, and people are getting for related reasons even more cautious on China. Regional indices of Brazil, Mexico, and others are doing well – both in local currencies and in USD. ...
The planting season for wheat in Ukraine is off…
Based on my contacts in Ukraine the planting season for wheat is off.Ukraine produces about 13% of global wheat.Russia produces another 14% and its traditional shipping routes through the Black Sea are closed indefinitely.This disturbing war would echo on every table in the world. ...
The UK yield curve is inverted
… and that is yelling out loud: recession.I would say, stagflation. ...